HB 1585-FN - AS INTRODUCED

2026 SESSION

26-3240

07/08

HOUSE BILL 1585-FN

AN ACT relative to environmental, social, and governance-related investment strategies by the state retirement system.

SPONSORS: Rep. Ammon, Hills. 42; Rep. Kofalt, Hills. 32; Rep. Miles, Hills. 12; Rep. Post, Hills. 42; Sen. McGough, Dist 11

COMMITTEE: Executive Departments and Administration

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ANALYSIS

This bill requires state and local public retirement systems to discharge their duties solely in the financial interest of the participants and beneficiaries.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

26-3240

07/08

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty-Six

AN ACT relative to environmental, social, and governance-related investment strategies by the state retirement system.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1  The State And Its Government; Public Retirement System Fiduciary Duty Act.  New Chapter; PUBLIC RETIREMENT SYSTEM FIDUCIARY DUTY ACT.  Amend RSA by inserting after chapter 5-D the following new chapter:  

CHAPTER 5-E

PUBLIC RETIREMENT SYSTEM FIDUCIARY DUTY ACT

5-E:1  Definitions.  In this chapter:  

I.  “Fiduciary” means any person who exercises any discretionary authority or control of management of the retirement system, exercises any authority or control over management or disposition of its assets, renders investment advice for a fee or other compensation, whether direct or indirect, with respect to any moneys or other property of the retirement system, or has the authority or responsibility to do so, or has any discretionary authority or responsibility in the administration of the retirement system.  

II.  “Fiduciary commitment" means any purpose or motive of a fiduciary in managing a portfolio or the investment of state funds. Evidence of a fiduciary commitment may include any evidence of a fiduciary’s purpose or motive in managing assets as a fiduciary, including, but not limited to, any of the following in a fiduciary’s capacity as a fiduciary:  

(a)  Advertising, statements, explanations, reports, communications with portfolio companies, shareholder votes by the fiduciary, statements of principles, or commitments; or

(b)  Participation in, affiliation with, or status as a signatory to, any coalition, initiative, joint statement of principles, or agreement to act or to endeavor to act in furtherance of environmental, social, political, or ideological interests.  

III.  “Financial” means having been prudently determined by a fiduciary to have a material effect on the financial risk or the financial return of an investment.  

(a)  “Financial” shall not include any action taken, or factor considered, by a fiduciary with any purpose whatsoever to further environmental, social, political, or ideological interests.  

(b)  A fiduciary may reasonably be determined to have taken an action, or considered a factor, with a purpose to further environmental, social, political, or ideological interests based upon evidence indicating such a purpose, including any fiduciary commitment to further, through portfolio company engagement, board or shareholder votes, or otherwise as a fiduciary, any of the following beyond what controlling federal or state law requires:  

(1)  Directly or indirectly eliminating, reducing, offsetting, or disclosing greenhouse gas emissions, including by restricting the exploration, production, utilization, transportation, sale, or manufacturing of timber, mining, agriculture, or fossil-fuel-based energy;

(2)  Instituting or assessing corporate board, or employment, composition, compensation, or disclosure criteria that incorporates characteristics protected in this state under RSA 354-B;

(3)  Divesting from, limiting investment in, or limiting the activities or investments of, any company, for failing, or not committing, to meet environmental standards or disclosures;

(4)  Access to abortion, sex or gender change or transgender surgery; or

(5)  Divesting from, limiting investment in, or limiting the activities or investments of, any company that engages in, facilitates, or supports the lawful manufacture, import, distribution, marketing or advertising, sale, or use of firearms, ammunition or components parts and accessories of firearms or ammunition.  

IV.  “Public retirement system” means any retirement or pension system or plan maintained, provided or offered by:  

(a)  The state or any political subdivision of the state; or

(b)  Any school, college, university, authority, or other enterprise operated by the state or any political subdivision.  

5-E:2  Fiduciary Duty.  

I.  In making, managing, and supervising investments of the reserve fund of a public retirement system, an investment manager, fiduciary, or board of trustees shall discharge its duties solely in the financial interest of the participants and beneficiaries for the exclusive purposes of:  

(a)  Providing financial benefits to participants and their beneficiaries; and

(b)  Defraying reasonable expenses of administering the system.

II.  A fiduciary shall take into account only financial factors when discharging its duties with respect to a public retirement system.  

III.  All shares held directly or indirectly by or on behalf of a public retirement system and/or the participants and their beneficiaries shall be voted solely in the financial interest of participants and their beneficiaries.  

IV.  Unless no economically practicable alternative is available, a public retirement system may not grant proxy voting authority to any person who is not a member, unless that person has a practice of, and in a contract in writing commits to, follow guidelines that match the board of trustees' obligation to act solely upon financial factors.  

V.  Unless no economically practicable alternative is available, public retirement system assets shall not be entrusted to a fiduciary, unless that fiduciary has a practice of, and in a contract in writing commits to, follow guidelines, when engaging with portfolio companies and voting shares or proxies, that match the board of trustees' obligation to act solely upon financial factors.  

VI.  Unless no economically practicable alternative is available, an investment manager, fiduciary, or board of trustees may not adopt a practice of following the recommendations of a proxy advisor or other service provider, unless such advisor or service provider has a practice of, and in a contract in writing commits to, follow proxy voting guidelines that match the board of trustees' obligation to act solely upon financial factors.

VII.  All proxy votes shall be tabulated and reported annually to the board of trustees.  For each vote, the report shall contain a vote caption, the plan’s vote, the recommendation of company management, and, if applicable, the proxy advisor’s recommendation.  These reports shall be posted on a publicly available webpage on the public retirement system's website.

5-D:3  Enforcement.  This chapter, or any contract subject to this chapter, may be enforced by the attorney general.  If the attorney general has reasonable cause to believe that a person has engaged in, is engaging in, or is about to engage in, a violation of this chapter, she or he may:  

I.  Require such person to file on such forms as the attorney general prescribes a statement or report in writing, under oath, as to all the facts and circumstances concerning the violation, and such other data and information as the attorney general may deem necessary.

II.  In addition to any other remedies available at law or equity, a company who serves as a fiduciary and who violates RSA 5-E:2 shall be obligated to pay damages to the state in an amount equal to 3 times all moneys paid to the company by the public retirement system for the company’s services.

2  New Subparagraph; Public Officers and Employees; New Hampshire Retirement System; Management of Funds.  Amend RSA 100-A:15, II by inserting after subparagraph (c) the following new subparagraph:  

(d)  Discharge its duties solely in the interest of members and beneficiaries in accordance with RSA 100-A:58 through 100-A:65, for the purposes of:  

(1)  Providing benefits to members and their beneficiaries; and  

(2)  Defraying reasonable expenses of administering the system.

3  New Subdivision; New Hampshire Retirement System Financial Interest Standards.  Amend RSA 100-A by inserting after section 58 the following new subdivision:  

New Hampshire Retirement System Financial Interest Standards

100-A:59  Definitions.  

I.  “Financial factor” means a factor that can be objectively demonstrated, with clear and quantifiable evidence, to have a direct and material impact on the risk or return of an investment over the applicable investment horizon, consistent with the system’s investment objectives and funding policy.

II.  “Non-financial factor” means any consideration that is supplemental to, or distinct from, financial analysis, including:  

(a)  Furthering environmental, social, political, or ideological interests;  

(b)  Advancing state, federal, or international policy objectives; or  

(c)  Relying on environmental, social, political, or ideological ratings, indices, or scores that incorporate non-financial criteria.

III.  “Public retirement system” means any retirement or pension system or plan maintained, administered, or offered by:  

(a)  The state or any political subdivision thereof; or  

(b)  Any authority, board, agency, or instrumentality of the state or political subdivision thereof.

IV.  “Investment manager” means any person retained to manage, acquire, or dispose of assets of a public retirement system.

V.  “Proxy advisor” means any person who sells, markets, or provides advice, recommendations, or research regarding proxy voting to a public retirement system or investment manager.

VI.  “Fiduciary” means any person who exercises any discretionary authority or control of management of the retirement system, exercises any authority or control over management or disposition of its assets, renders investment advice for a fee or other compensation, whether direct or indirect, with respect to any moneys or other property of the retirement system, or has the authority or responsibility to do so, or has any discretionary authority or responsibility in the administration of the retirement system.

100-A:60  Investment Standards and Fiduciary Duty.  

I.  All investment decisions by any fiduciary shall be based solely on financial factors as defined in RSA 100-A:59.

II.  Fiduciaries shall not rely on environmental, social, political, or ideological ratings, indices, or scores unless they can be demonstrated, through objective and verifiable evidence, to be based exclusively on financial performance metrics.

III.  No fiduciary duty shall be construed to include the intent to advance environmental, social, political, or ideological interests.

IV.  A fiduciary shall not be deemed in violation of this section if they:  

(a)  Document in writing the financial factors considered;  

(b)  Demonstrate with quantifiable evidence that the decision is based solely on financial factors; and  

(c)  Disclose such documentation to the board of trustees and make it publicly available.

100-A:61  Proxy Voting Requirements.

I.  All proxy votes shall be cast solely based on financial factors.

II.  The retirement system shall not engage any proxy advisory service that incorporates environmental, social, political, or ideological interests, rather than making decisions solely based on financial factors.

III.  Proxy voting records shall be:  

(a)  Posted on the retirement system’s website within 90 days of each annual meeting season;  

(b)  Disclosed with proposal description, the system’s vote, management’s recommendation, any proxy advisor recommendation, and supporting financial justification; and  

(c)  Independently audited annually for compliance.

100-A:62  Investment Manager Requirements.

I.  Contracts with investment managers shall include:  

(a)  A requirement to act based solely on financial factors;  

(b)  A prohibition on reliance on environmental, social, political, or ideological ratings or indices incorporating non-financial factors;

(c)  Written confirmation that investment recommendations from the investment manager will be based exclusively on financial factors; and  

(d)  Public disclosure of any environmental, social, political, or ideological-related factor claimed to be financial, with supporting evidence.

100-A:63  Shareholder Proposals and Economic Analysis.

I.  The retirement system or an investment manager shall not support any shareholder proposal unless a written economic analysis demonstrates a clear and quantifiable financial benefit.

II.  There shall be a rebuttable presumption that votes against shareholder proposals are based solely on financial factors when such proposals:  

(a)  Exceed legal requirements;  

(b)  Impose costs without measurable financial benefit; or  

(c)  Restrict lawful and profitable business activities.

100-A:64  Implementation, Oversight, and Compliance.

I.  This subdivision shall only apply to any new investments, contracts, and proxy votes entered into on or after January 1, 2027.

II.  The office of the legislative budget assistant shall appoint an independent auditor to review all investment and proxy records annually for compliance with this subdivision.  The auditor shall prepare a report to be submitted to the president of the senate, the speaker of the house of representatives, and the governor.

100-A:65  Enforcement.

I.  This subdivision may be enforced by the attorney general.  If the attorney general has reasonable cause to believe that a person has engaged in, is engaging in, or is about to engage in, a violation of this subdivision, she or he may require such person to file on such forms as the attorney general prescribes a statement or report in writing, under oath, as to all the facts and circumstances concerning the violation, and such other data and information as the attorney general may deem necessary.  The attorney general may bring a civil action to enforce this law.  

II.  The attorney general shall be empowered to seek specific performance and other equitable remedies in addition money damages, including:  

(a)  Cease-and-desist orders;  

(b)  Corrective action requirements;  

(c)  Contract termination for repeated or willful violations; and  

(d)  Personal financial penalties of up to $10,000 per violation and restitution for any losses attributable to willful violations.

III.  Fiduciaries acting in good faith with documented evidence of decision-making based solely on financial factors shall be exempted from civil or administrative action by the attorney general.

100-A:66  Severability and Construction.

I.  If any provision of this subdivision shall be held invalid, the remainder shall remain in force.

II.  Nothing in this subdivision shall be construed to:  

(a)  Require divestiture from any company, industry, or investment;

(b)  Prohibit consideration of material financial risks when objectively demonstrated; or  

(c)  Permit consideration of environmental, social, political, or ideological factors for any non-financial purpose.

4  Effective Date.  This act shall take effect January 1, 2027.

LBA

26-3240

12/3/25

HB 1585-FN- FISCAL NOTE

AS INTRODUCED

AN ACT relative to environmental, social, and governance-related investment strategies by the state retirement system.

FISCAL IMPACT:   This bill does not provide funding, nor does it authorize new positions.

METHODOLOGY:

This bill requires that  all state and local public retirement systems in New Hampshire must act solely in the financial interest of their participants and beneficiaries.  The bill prohibits the use of environmental, social, or political (ESG) factors in investment or proxy voting decisions unless those factors have a clear, quantifiable financial impact.  The bill also enables the Attorney General and Department of Justice to investigate violations upon complaint.  

The Legislative Budget Assistant (LBA) would be responsible for appointing an independent auditor to annually review compliance of the New Hampshire Retirement System investment and proxy records, with the first audit expected in FY 2028.  The LBA estimates the audit would cost $55,000 in FY 2028 and $45,000 annually thereafter, which cannot be absorbed within its current budget.

The New Hampshire Retirement System (NHRS) states that while the bill’s restrictions could negatively impact investment returns, the actual fiscal impact on employer contributions is indeterminable.  Additionally, NHRS has concerns about possible costs due to administration, potential legal conflicts with existing fiduciary duties under state and federal law, and the effect the bill’s penalties of up to $10,000 per violation and restitution for any losses to willful violations could have on board participation and fiduciary engagement.

AGENCIES CONTACTED:

New Hampshire Retirement System and Office of Legislative Budget Assistant